National Will Month

Did you know that August is National Make-A-Will Month? Although most Americans recognize the importance of estate planning, it is estimated that 50-60 percent do not have a will. If you do not yet have an estate plan, now is the time to act!  Remember that even if you set up a revocable trust as part of your estate plan, you still need a will.

Why is it Important? 
The entertainer known as Prince, or the Artist formerly known as Prince, died at the age of 57. Since he did not establish an estate plan before he passed, there was no decision or designation as to how is fortune should be divided. Prince’s estate is still tied up in legal battles five years later!  Not having a will can lead to family disputes, costly litigation and legal fees. Having your final documents in order before it’s too late is an expression of love and compassion for your family and friends. Don’t we keep reminding you to ‘Plan Now for Peace of Mind Tomorrow’?

Think Estate Planning is Only for the Wealthy?
A person’s wealth or assets will determine how detailed their estate plans may need to be, but everyone should have a plan in place. From selecting guardians for your children or who will act as the executor of your will, to who will inherit your most treasured items, a will is an important document that stipulates your desires upon your passing. Without it, your preferences are unknown and may not play out the way that you’d want them to. Think of a will like a genie in a bottle, making sure your wishes come true.

Most people cite not having time, not wanting to think about it, or simply not getting around to it as reason for not having a will.  With this month being National Make-A-Will Month, there is no better time to act than now.   

Regular Revisions
If you already have a will – congratulations! You are better prepared than more than half of Americans. While estate plans never expire, we know that life happens – births, marriages, deaths, and other important family changes. Everyone should review their will annually and make necessary revisions. This is also why a will isn’t just for someone who is older. Newlyweds, new parents, divorcees, etc. will all want to consider having a will or revising their existing will.

If you would like to set up an estate plan, please give Hampton Law a call at 239.309.0090 to schedule an initial consultation.

My Neighbor Said…I Should Put Off Estate Planning Due to Coronavirus

Although we are all a bit worried and unsure at this time, some things cannot and should not be avoided or put off to a later time. Now more than ever is the time to make sure that your affairs are in order, your assets are protected, and you have peace of mind. Now more than ever is the time to plan for an emergency, in hopes that you’ll never be faced with that situation. If you don’t have a Durable Power of Attorney or a Health Care Surrogate, what would you do if you contracted COVID-19 and were unable to manage your finances or make your own health care decisions? When it comes to estate and long-term care planning, “the early bird gets the worm.” Planning only becomes more complex, time sensitive and expensive as time passes. Procrastinating these important decisions will guarantee two situations, a court will likely decide what is best for you and it will cost substantially more than proactively planning.

Who makes decisions for you when you cannot? There are two primary documents that can give an Agent of your choosing the power to make decisions for you when you’re incapacitated. The first is the Durable Power of Attorney and the second is the Health Care Surrogate. These processes do not  involve a court or public process.

Durable Power of Attorney is a document that delegates authority to one or more individuals to enter into or alter legal agreements and make financial decisions on your behalf. The individual, normally referred to as an “Agent” or “Attorney-In-Fact” should ideally be someone you’ve known for years, a person you trust and who is financially solvent. Typically, clients will choose a family member to take on this role.

The designation of Health Care Surrogate is a document that delegates authority to an “Agent” or “Surrogate” to make health care decisions on your behalf. For example, if you are unconscious or unable or speak for yourself, your physician would be able to confer with your surrogate in your stead. Therefore, it is important to communicate your concerns and wishes for treatment with your surrogate well in advance of a healthcare emergency.

Decisions regarding your health care are difficult to make. That’s what makes it so important to not wait until the last minute. In light of coronavirus, we are all trying to do our best- eating well, exercising, getting plenty of rest and maybe taking a few extra Vitamin C supplements. Hampton Law wants to help ensure that everyone stays healthy, but also has access to our services. We will be staying open during normal business hours in an effort to serve you during this critical time. In addition to in-office appointments, we can also host video conferencing or phone conferencing appointments for anyone who is practicing social distancing at this time. We’ve got you covered!

My Neighbor Said…I Should Give Everything to My Children Now

This time around, your neighbor is incorrect for a few reasons. Under most circumstances, you do not want to give assets away before your passing. In my experience in elder law, you never know how long you might need to draw on your assets for care, medical expenses, etc. You don’t want to be in a situation where you need additional finances and no longer have access to them. In addition, there is no inheritance tax in most of the United States, which means your children will not get taxed on any properties or assets you would bequeath to them.

There is a difference between gift tax rules and Medicaid gift rules. The gift tax is a tax on money you give away during your lifetime. However, you are allowed under IRS rules to give away at least $15,000.00 per individual without needing to use your exemption or file a IRS Form 709 Gift Tax Return. The current individual exemption is $11.58 million. Any amount over the exclusion amount must be reported and once your exemption amount is used up, any gifts beyond the exemption will be subject to the gift tax.

There are also income tax reasons why you would not want to give money to your children now.  If you give an asset away like real estate, the recipient of your gift will receive your tax cost basis (what you paid) for that asset. If your son or daughter receives the asset upon your passing, he or she will receive your date-of-death value in the asset. If your son or daughter sold the asset the day after your death, they would likely recognize no capital gains tax. As you can see, there are significant income tax benefits to waiting until your passing for assets to pass to your loved ones.

Unlike tax laws, Medicaid views gifting very differently. If you have limited financial resources or Medicaid eligibility is a concern, then you also don’t want to give assets away before end of life. Medicaid has a five year look back on impermissible transfers. In sum, Medicaid does not permit you to give money away to become eligible for the benefit. There are several exceptions to this rule, but you should consult with an attorney as even a minor failure in execution could cause negative consequences or even be considered fraud.

Not all gifting is bad (hello birthdays presents!), but you should consult with an experienced estate planning and elder law attorney prior to making any large gifts in order to minimize the risk of unintended consequences.

My Neighbor Said… “I Should Update My Will Anytime My Life Changes”

Depending on the circumstance, your neighbor may be correct. Not every life change warrants that you make updates to your will, but there are certain instances where you want to talk to your estate planning attorney to make sure your will is current. For instance, if you’ve lost a loved one, got married, or are recently divorced, then you most definitely want to update your last will, your trust (if you have one), your durable power of attorney and any other important legal documents in order to reflect these life changes.

Your last will, trust and beneficiary designations should always reflect a new spouse or remove a former one. An oversight of not updating your estate planning documents and beneficiary designations can result in unnecessary headaches later on for you and your heirs. Not only should you update your will and trust, but also review your durable power of attorney, health care surrogate and living will. Florida’s power of attorney laws were revised in October 2011, and your power of attorney may find themselves unable to exercise authority in order to take care of your finances if you haven’t updated this document after Oct. 2011.

Another important aspect to know, since we have many seniors who relocate to Florida from northern states, is that your documents may be valid, despite moving from one State to another.  Florida law provides that out of state documents are valid, so long as they were validly executed according to the State laws at that time.

Although I do recommend making sure that updates take place over time as your life changes, depending on the wording of your will or trust you may not need to update those documents every time. For example, if your will makes mention of your descendants, but not specific children by name, then your will may not need to be updated. However, it’s always a good idea to double check with your attorney. In fact, you should see a Florida licensed attorney every couple of years to review any changes in your life. They are the experts on whether your documents or beneficiary designations need to be revised.

The best thing to keep in mind, is that it’s always easier to make changes or updates to these documents prior to when you actually need them. It’s much harder to make changes once you’re already in a crisis. As the motto at Hampton Law goes, “Plan today, for peace of mind tomorrow.”

How Likely Are You to Need Long-Term Care?

long-term care facilityPlanning for retirement and deciding whether to buy long-term care insurance would be a lot easier if you knew your odds of needing long-term care, as well as at what age and for how long. Unfortunately, there’s no definite answer. On the other hand, some statistics do provide a bit of guidance.

The Numbers

In 2012, there were about 1.2 million nursing home residents over 65 years old in the United States. Of these, 18 percent were 65 to 74 years old, 32 percent were between 75 and 84, 41 percent were between 85 and 94, and 9 percent were 95 or older. Of course, there are fewer of us in each age cohort, so the likelihood of needing nursing home care rises even more steeply with age than these percentages indicate. While these numbers do not reflect other types of long-term care, the need for home care, assisted living, or care provided by family members probably rises at similar rates.

According to the American Association for Long-Term Care Insurance, in 2012 64 percent of long-term care claims were made by those over age 80 and only 9 percent were from those in their 60s. Meanwhile, according to the association’s figures for 2008, 44 percent nursing home residents stay less than a year, 30 percent stay between one and three years, and only 24 percent spend more than three years in a facility. Updated numbers would likely indicate even shorter stays as more seniors receive care at home or in assisted living facilities. Those who move to nursing homes do so when they are older and sicker, meaning that they stay for a shorter period of time than in the past. According to one reported statistic, only 40 percent of seniors spend any time in a nursing home. 

Interpreting the Numbers

So, what do all of these statistics mean in terms of your planning? First, the odds are that you will not need care until you are at least 80 or 85. Second, if you do need nursing home care, there’s a 44 percent chance it will last less than a year (either because you will return home after a period of rehabilitation or you will not survive more than a year) and only a one-in-four chance that your stay will last three or more years. Of course, if it does, your costs will become prohibitive. However, since only 40 percent  of seniors spend any time in a nursing home and only a quarter of those stay longer than three years, this means that statistically you have only a one in 10 chance of needing more than three years of nursing home care.

Unfortunately, these statistics are somewhat dated and are just statistics. How do any of us know whether we are part of the 60 percent of seniors who will never enter a nursing home, the 30 percent who will spend less than three years there, or the 10 percent who will spend more than three years? We don’t, but we can modify the statistics based on our own circumstances, especially with respect to certain factors.

Key Factors

Family History: Did your parents live to a ripe old age with no cognitive impairment or become demented at 72, requiring continuing care for another 10 years? While we do not have our parents’ exact genes or live their same lifestyle, there are likely to be some similarities.

Health and Fitness: Do you have any illnesses or conditions that could lead to future impairments or are you in good health and take good care of yourself? Are you overweight or obese, which can lead to illness and disability? Of course, in terms of long-term care, health can cut in both directions. Bad health can lead to the need for care or it can cause an early death, eliminating the need for care. Good physical health can delay the need for care but in the event of cognitive challenges mean that you live a long time with impairments.

Family Situation: If you do need assistance in the future, do you have a spouse, children or other family members who could provide care? Or would you need to pay for it whether at home, in assisted living or in a nursing home?

We have statistics on the need for nursing home care because nursing homes are highly regulated. We know how many people are in them at any one time and how long they stay. We don’t know for sure how many seniors are receiving care at home or in assisted living facilities. But let’s assume for the sake of argument that for every person living in a nursing home, there’s another receiving care at home or in assisted living. Then we can assess the average likelihood of needing care as follows:

No Need for Care

            0 – 1 Year

             1 – 3 Years

    More than 3 Years

      22%

            35%

              24%

    19%

Then, you can adjust these numbers up or down based on your health, family history and family situation. For instance, if you are in excellent health, you might add 10 percentage points to the likelihood that you will not need any care, reducing the likelihood of needing 1 to 3 years or more than 3 years of care by 5 percentage points each. If, on the other hand, one of your parents needed a decade of care due to Alzheimer’s disease, you might add 5 percentage points each to the longer levels of care, taking 5 percent off of both the “no need” and the “less than one year” categories. Statistically, men are more likely to receive assistance from their wives, than women from their husbands, in large part because women live longer on average.

While this is far from perfect, by developing your own table you will have a better idea of how to protect yourself and your family’s finances should you require long-term care.  Your attorney can help with this planning, explaining your options and the steps that can be taken now to prevent financial devastation later.  

Activities of Daily Living Measure the Need for Long-Term Care Assistance

Most long-term care involves assisting with basic personal needs rather than providing medical care. The long-term care community measures personal needs by looking at whether an individual requires help with six basic activities that most people do every day without assistance, called activities of daily living (ADLs). ADLs are important to understand because they are used to gauge an individual’s level of functioning, which in turn determines whether the individual qualifies for assistance like Medicaid or has triggered long-term care insurance coverage.   

The six ADLs are generally recognized as:

  • Bathing. The ability to clean oneself and perform grooming activities like shaving and brushing teeth.  
  • Dressing. The ability to get dressed by oneself without struggling with buttons and zippers.
  • Eating. The ability to feed oneself.
  • Transferring. Being able to either walk or move oneself from a bed to a wheelchair and back again.
  • Toileting. The ability to get on and off the toilet.
  • Continence. The ability to control one’s bladder and bowel functions.

There are other more complicated tasks that are important to living independently, but aren’t necessarily required on a daily basis. These are called instrumental activities of daily living (IADLs) and include the following:

  • Using a telephone
  • Managing medications
  • Preparing meals
  • Housekeeping
  • Managing personal finances
  • Shopping for groceries or clothes
  • Accessing transportation
  • Caring for pets

Long-term care providers use ADLs and IADLs as a measure of whether assistance is required and how much assistance is needed. In order to qualify for Medicaid nursing home benefits, the state may do an assessment to verify that an applicant needs assistance with ADLs. Other state assistance programs also may require that an applicant be unable to perform a certain number of ADLs before qualifying. In addition, long-term care insurance usually uses the inability to perform two or more ADLs as a trigger to begin paying on the policy.  

 

National Will Month

Did you know that August is National Make-A-Will Month? Although most Americans recognize the importance of estate planning, it is estimated that 50-60 percent do not have a will. If you do not [...]

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